Small Business Accounting_ How to Close Your Books at the End of the Year
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Small Business Accounting: How to Close Your Books at the End of the Year?

As the year is coming to an end, every business and the firm owner is busy with the accounts, the sale, the purchases, and the year’s profit and losses. Sometimes, it gets tough to manage the accounts and finances, especially for new business ventures.

But systematically doing work can always make it easy. So here is a guide to help you with the essential task for your business:

  • Invoicing: Credit notes and invoices often go unnoticed due to all the hassle at the year end, thus leading to over or understatement of sales, meanwhile affecting the profitability of the business. Therefore, it is essential to make sure that all the invoices are cleared and recorded sequentially. It can be a difficult task at times. But there are various Bookkeeping Outsourcing Services available in the market which assist in the proper tracking of invoices.
  • Recording & Categorizing: Make sure to record all the incomes and expenses into the software you are using. Even the ones that you might have missed in the past. It will help you to identify all the tax-deductible for your business.
  • Separating Accounts: You should always keep your business and personal expenses account separate. Mixing up both the expenses could be a problem for the business in the long run. To make it easier, you can use Online Bookkeeping Services.
  • Double-checking expenses: Make sure to double-check all the allowable expenses to maximize your deductible tax for your small business. Generally, small businesses claim expenses like a home office, business traveling, tools, and equipment. Make sure to keep a record of all receipts as proof.
  • Contractors’ payment: Paying for contractors’ services should also be a priority before closing the books. It will help analyze the actual expenses and give a real-time picture of how the business is doing.
  • Bank reconciliation: Always match the bank statement with your accounting software’s actual incomes and expenses. If they do not match, then there is some issue that needs to be addressed. One can always take the help of Bookkeeping Outsourcing Services to make it easier.
  • Up-to-date Assets: Make sure to check if your fixed assets are up to date. Fixed assets are the company’s products for a more extended period and whose value decreases with time and usage.

Ensure the value every year before closing the books and remove or record any other asset that may have been removed or added to the business.

If using the services of another firm, be sure to use the best Online Bookkeeping Services.

  • Employee Bonus: Also, be sure to decide if you would be paying employees’ bonus or not, as you will need to set the proper withholding tax aside if you decide to give them a bonus.
  • Payroll Taxes: It is always advisable to check your country’s payroll liability before closing the books. Also, make sure that your payroll tax liability per your software matches the actual information submitted to the concerned authority.
  • Employee Verification: Check all your present and past employees’ and contractors’ information to ensure that they are all correct and recorded correctly.
  • Business Inventory Count: Check and count your inventory for all the goods and assets to ensure no discrepancies.
  • Checking Reports: Before finally closing the books, make sure to run all the reports made through accounting software or take services from an excellent Online Bookkeeping Service to get the reports checked.
  • Create a File: Make a file for your company wherein all the reports can be filed appropriately to be used later by the accountant to file taxes or make necessary adjustments.
  • Closing the Books: Once done with all of these things, you can close your books and take a sigh of relief.

Wrapping up

For the successful closing of books, make sure to go through all these steps. It will make your task more comfortable and help ensure that you do not miss anything important.

To make it even more comfortable, you can always hire a Bookkeeping Outsourcing Service provider.

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